The United States Supreme Court has recently declined to hear an appeal from the Ninth Circuit holding that a freight broker may be held liable for injuries caused in an accident where the broker allegedly negligently selected an unsafe motor carrier. Miller v. C.H. Robinson Worldwide, Inc., 976 F.3d 1016 (9th Cir. 2020), cert. denied. This denial leaves open the strong possibility of new avenues of attack for plaintiffs and new potential liabilities for defendants.

The facts in Miller are relatively straightforward. C.H. Robinson is a shipping, logistics, and brokering company. Id. at 120. As a freight broker, C.H. Robinson picked Singh d/b/a RT Service and/or Rheas Trans, Inc. to transport a shipment for Costco. Id. Singh lost control in icy conditions, crossed the median, and hit Miller head on resulting in Miller becoming a quadriplegic. Id. Miller sued Singh, Costco, and C.H. Robinson. Id. It was alleged that Singh and his companies had:

a history of safety violations; over 40% of their trucks have been deemed illegal to be on the road when stopped for random inspections; they have been cited numerous times for hours of service violations and false log books; and their percentage of out of service violations is twice that of the national average.

Id. at 1021.

It was alleged that C.H. Robinson was liable under the theory that C.H. Robinson knew or should have of Singh’s incompetence and unfitness to carry the load. Id. at 1020-21. At the time of the appeal, Miller had settled with Costco and Singh and only C.H. Robinson was left in the case. Id. at 1021.

C.H. Robinson argued that they Federal Aviation Administration Authorization Act of 1994 (the "FAAAA") preempts state laws that are "related to a price, route, or service of any . . . broker," unless one of the FAAAA's exceptions applies. Id. at 1020-1023. If federal law preempts state law in this area, and the exception does not apply there would be no state law cause of action for negligence against C.H. Robinson.

The FAAAA provides, in relevant part:

(1) General rule.-Except as provided in paragraphs (2) and (3), a State, political subdivision of a State, or political authority of 2 or more States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . , broker, or freight forwarder with respect to the transportation of property[.]

(2) Matters not covered.-Paragraph (1)-(A) shall not restrict the safety regulatory authority of a State with respect to motor vehicles . . . .

49 U.S.C. § 14501(c).

The trial court held that allowing the state law claim against C.H. Robinson to go forward would "reshape the level of service a broker must provide in selecting a motor carrier to transport property[,]" from the standard set by federal law and, therefore, that the state law claim was preempted. Miller, 967 F.3d at 1021. The trial court explained “to avoid negligence liability, a broker would consistently need to inspect each motor carrier's background," and "such additional inspection would result in state law being used to, at least indirectly, regulate the provision of broker services by creating a standard of best practices." Id. The trial court found that the exception to the FAAAA did not create a private right of action in negligence and instead was meant to allow the state to enforce its criminal and traffic laws. Id.

Miller appealed the trial court’s ruling to the Ninth Circuit Court of Appeals. First, Miller argued that under the FAAAA that his negligence claim was not a law “relate[d] to price, route, or service of [a] broker.” Id. at 1023-25. The Ninth Circuit rejected this argument holding that the negligence action was essentially being used to regulate broker services. Id. Miller next argued that his common law negligence claim fell into the exception granting states “safety and regulatory authority.” Id. at 1026-29. The Ninth Circuit held that the common law claim did appear to fall within the state’s safety and regulatory authority and, therefore, that the claim for negligence was not preempted. Id. C.H. Robinson then argued that, even if Miller’s claim related to “safety and regulatory authority” it was not a regulation “with respect to motor vehicles.” Id. at 1030-31. The Ninth Circuit rejected this argument holding that even broker regulations were considered “with respect to motor vehicles.” Id. The Ninth Circuit reversed and remanded the case to the trial court, allowing Miller’s negligent brokering claim to proceed. Id. at 1031.

It remains to be seen whether the notoriously liberal and plaintiff friendly Ninth Circuit will be followed by other courts. No other circuit court of appeals has yet taken up the issue.

It appears that some trial courts that have addressed the issue have rejected negligent brokering claims. Creagan v. Wal-Mart Transp., LLC, 354 F. Supp. 3d 808, 813 (N.D. Ohio 2018) (In the Sixth Circuit); Loyd v. Salazar, 416 F. Supp. 3d 1290, 1295-98 (W.D. Okla. 2019) (in the Tenth Circuit). Alpine Fresh, Inc. v. Jala Trucking Corp., 181 F.Supp.3d 250, 257 (D.N.J. 2016) (in the Third Circuit); Ameriswiss Tech., LLC v. Midway Line of Illinois, Inc., 888 F. Supp. 2d 197, 205 (D.N.H. 2012) (in the First Circuit); Miller v. Air Van Lines, Inc., No. KNLCV075003875S, 2012 Conn. Super. LEXIS 3095, 2012 WL 6901155, at *7 (Conn. Super. Ct. Dec. 20, 2012) (in the Second Circuit); ASARCO LLC v. England Logistics Inc., 71 F. Supp. 3d 990, 1006-07 (D. Ariz. 2014) (in the Ninth Circuit, no longer good law); Finley v. Dyer, No. 3:18-CV-78-DMB-JMV, 2018 U.S. Dist. LEXIS 182482, 2018 WL 5284616 (N.D. Miss. Oct. 24, 2018) (in the Fifth Circuit); Krauss v. IRIS USA, Inc., No. 17-778, 2018 U.S. Dist. LEXIS 74922, 2018 WL 2063839, at *3-7 (E.D. Pa. May 3, 2018) (in the Third Circuit).

Other courts have held that federal law does not preempt state law negligent brokering claims. Scott v. Milosevic, 372 F. Supp. 3d 758, 769-70 (N.D. Iowa 2019) (in the Eighth Circuit); Lopez v. Amazon Logistics, Inc., No. 3:19-CV-2424-N, 458 F. Supp. 3d 505, 2020 U.S. Dist. LEXIS 74846, 2020 WL 2065624, at *6-8 (N.D. Tex. Apr. 28, 2020) (In the Fifth Circuit); Covenant Imaging, LLC v. Viking Rigging & Logistics, LLC, No. 3:20-CV-00593 (KAD), 2021 U.S. Dist. LEXIS 49000, at *19 (D. Conn. Mar. 16, 2021) (in the Second Circuit); Factory Mut. Ins. Co. v. One Source Logistics, LLC, No. LACV1606385JAKJPRX, 2017 U.S. Dist. LEXIS 215317, 2017 WL 2608867 (C.D. Cal. May 5, 2017); Nyswaner v. C.H. Robinson Worldwide Inc., 353 F. Supp. 3d 892, 895 (D. Ariz. 2019) (in the Ninth Circuit); Mann v. C. H. Robinson Worldwide, Inc., No. 7:16-CV-00102, 2017 U.S. Dist. LEXIS 117503, 2017 WL 3191516 (W.D. Va. July 27, 2017) (in the Fourth Circuit); Freightliner Custom Chassis Corp. v. Landstar Ranger Inc., No. 8:20-CV-1390 (FJS/CFH), 2022 U.S. Dist. LEXIS 15256 (N.D.N.Y. Jan. 27, 2022) (in the Second Circuit); Skowron v. C.H. Robinson Co., 480 F. Supp. 3d 316, 320-22 (D. Mass. 2020) (in the First Circuit); Taylor v. Sethmar Transp., Inc., Civil Action No. 2:19-cv-00770, 2021 U.S. Dist. LEXIS 196230 (S.D. W. Va. Oct. 12, 2021) (in the Fourth Circuit); Gilley v. C.H. Robinson Worldwide, Inc., No. 1:18-00536, 2021 U.S. Dist. LEXIS 161786 (S.D. W. Va. Aug. 26, 2021) (in the Fourth Circuit); Grant v. Lowe's Home Ctrs., LLC, Civil Action No. 5:20-02278-MGL, 2021 U.S. Dist. LEXIS 16332 (D.S.C. Jan. 28, 2021) (in the Fourth Circuit); Gerred v. Fedex Ground Packaging Sys., Civil Action No. 4:21-cv-1026-P, 2021 U.S. Dist. LEXIS 187602 (N.D. Tex. Sep. 23, 2021) (in the Fifth Circuit).

While the cases involving negligent brokering are numerous, except for the Ninth Circuit, there is no controlling authority and outcomes have varied from court to court. With the unpredictability of negligent brokering claims across the United States, freight brokers have no choice but to carefully monitor who they select to carry loads and pay for insurance that will cover them in the event they get hit with one of these unpredictably enforced claims. Until further Circuit Courts weigh in and the Supreme Court decides to address whether negligent brokering claims are preempted by the FAAAA brokers have no choice but to prepare for every eventuality.

If you have questions about this article, please contact Steve Setliff (ssetliff@setlifflaw.com) at 804-377-1261.